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Saturday, March 1, 2008

BUDGET IMPACT on various sectors

Here is a brief compilation of the effect this Budget will have on various sectors : 1.AUTOMOBILES : POSITIVEExcise on 2 and 3 wheelers, small passenger cars reduced from 16% to 12%.2.BANKING : POSITIVE with a caveatPSU Banks are expected to face pressure on their net interest margins until the subsidy for waiver of agricultural loans and one time settlement of loans is released from the govt.3.CEMENT : NEUTRAL The govt. has increased budgetary allocation for roads under NHDP. This coupled with the govt.'s focus on Infrastructure & Housing development will be key drivers for raising demand. Appointing of a Coal regulator is a postive move as it will facilitate timely and proper allocation of coal (a key raw material) blocks to the core sectors, cement being one of them. From a differential excise duty levied last year, the budget proposes a flat rate of Rs.400 per MT bulk cement or 14% ad valorem, whichever is higher and cement clinkers excise duty at Rs.450 per MT. This move will not have much impact because most cement manufacturers have set up grinding units so they don't have to source clinker.4.ENGINEERING AND CAPITAL GOODS : POSITIVEReduced excise duty on manufacturing goods will boost demand. Custom duties on project imports lowered. Overall, a good budget for engineering. 5.FMCG : POSITIVEReduction in taxes and waiver of farm loans will boost consumer demand. Increased consumption to boost volumes.6.INFORMATION TECHNOLOGY : NEUTRAL Higher spend on education is good news for training providers. But the service tax on customised software is a negative for technology companies but it will be passed on to the clients.7.INFRASTRUCTURE : POSITIVEContinued thrust on Infrastructure spending is good news. Major developmental schemes get vastly increased allocations. But service tax on works contract raised from 2% to 4%.8.MEDIA : POSITIVE Cheaper set top boxes is good news for direct to home operators and will help in digitisation of the TV Industry. More money for I&B Ministry. 9.OIL & GAS : NEUTRAL No reduction in custom duties for crude oil and petroleum products. Marginally negative for polymer industry as costlier Naptha will push its cost structure upwards.10.PHARMACEUTICALS : POSITIVEReduction in excise duty from the current 16% to 8% is a big positive for this industry. Increased allocation of funds for eradication of HIV/AIDS and polio and reduction in customs duty on certain life saving drugs from 10% to 5% is a positive for companies having product pipeline catering to these segments.11.REAL ESTATE & CONSTRUCTION : NEUTRALCut in peak CENVAT rate from 16% to 14% could benefit companies as raw material cost would come down. Increase in short term capital gains tax could increase tax liabilities for several companies.12.RETAIL : NEUTRALNothing specifically aimed at development of this sector. But Increase in threshold limit for personal income tax to result in a rise in disposable incomes thereby fuelling a growth in this sector.13.TELECOM : NEUTRALService tax, revenue sharing licence fee, spectrum charges unchanged. Cheaper data cards, convergence products. 1% excise duty on cellphones will make them more expensive.14.TEXTILES : NEUTRAL TO POSITIVEIntegrated textile parks, upgradation gets a boost. Yarn banks on the anvil. Additional allocation to TUF to accelerate capital investment in the textile sector. Removal of National Calamity Contingent Duty (NCCD) of 1% on polyester filament yarn to benefit companies that have spinning capacities.15.UTILITIES : NEUTRALReduced 7.5% customs duty on project import to 5% to boost investments. Additional 4% duty of 4% withdrawn from power generation projects (other than mega power projects), transmission, sub-transmission and distribution projects, good for high voltage transmission projects. Cheers!

Hi Superstar,I had some fertilzer stocks(nagarjuna, chambal and oswal) with huge losses.Can i expect any upward move in coming 6 months or can i book the losses at CMP. Please suggest in this. What is the near term target for DCB.Thanks in advance.

Hi Superstar,i am following ur comments for a long time. sometime back u had recommended Aurobindo when it was trading around 470. i bought 10 @ 480. i require the money back somewhere in 2009 end. can i hold on to it? i've 50 IFCI @ 78. whats ur call on that?

Hi Shashjpn,I had indicated here earlier also that there was a huge speculative build up in Fertilizer stocks due to the budget. I am not expecting any big movement in any of the stocks named by you in the next six months except maybe an Oswal Chem. DCB is fairly valued at cmp according to me.

Hi Manoj,If I was in your place, I would have got out of all your stocks except NTPC and invested the money in JKLAKSHMI CEMENT instead for long term.

Hi Sudeep,Since you have a two year view, you can hold on to Aurobindo. The budget has been kind to it. IFCI depends totally on the whims of the management who may decide again on the terms of stake sale. I had earlier recommended a sell on it at 100 levels. I would much rather switch to some safer stock.

Hi Nagendra,I can give you a few names off the cuff, without getting too much in detail.Maruti, Allahbad Bank, BHEL, L&T, HUL, Aurobindo, Eastern silk etc.

do you expect nifty to come down between 4200-4400. Seeing the budget, election indication is for july - august. Some of the good brokers are recommending to sell all the holdings now and buy at lower levels (4200 nifty). your comments?

How are you? I dont think Market is going to be back in action before 6-9 months from now based on US situtaion. US is in recession but they are not decalring it and waiting to revive. Fed rate will again cut by 50 points. This overall situation is imapcting Indian market very badly. Let us watch US financial data going to be declared this week. Well! This is a sit n watch situtalion. But still I am unable to control myself to buy few power sector/PSU banking shares in this sluggish market.I just need a little advice from you on power stock, NTPC power finanac, power grid, PTC. What shoudl be the bewst lowest price for these power shares. Please AdviseThanksRajeev

Can you advise me on investing in Jayaswal Neco Limited for a long term basis at least for 6 months to 1 year at present as i have seen you advising earlier. Now i have been asked by my broker to do so. Pleae helpRegardsGirish

Hi Ashok,Brokers usually give the wrong advice to their clients. Brokers are not market experts, so I would be cautious in believing everything they say. More often than not, they have vested interests in any advice they might give you. At this moment, I do not see markets breaching the low of 4500 on the Nifty. Talking about 4200 levels on the Nifty is a bit premature right now.

Hi Surbhi,You should have followed stop loss. I don't think that averaging now is a good idea. If you have cash to invest go for relatively better quality stocks rather than penny stocks.

Hi Rajeev,I am good. Thanks. The whole world's markets are taking their cues from the US. I agree with you that market may take some more time before recovering. The second half of 2008 should be better than the first half. In the power sector, NTPC is the best pick and one can buy on dips for long term.

Hi agc,If you have a long term view, you can start buying Jayaswal Neco in parts on dips.

Hi Surbhi,You can go for JKLAKSHMI CEMENT at current price. It is one of the best buys available in the market today. Yes, I'm in Mumbai. I don't think its appropriate to give more personal details on a public forum. For personal communications, use email.

do u think utam galva steel(39/-) and seamac ltd (147/-) are value picks at this level. at what level do you suggest buying in these counters. uttam galva is trading at a PE below 3. semac was recommended to me at rs. 190/- as multibagger.

Hi Real Value,I would not recommended buying power stocks, including JP Hydro, even now. There is still some room for downside. The valuations two months back had gone to crazy levels in that sector and there is still some more time before the prices become saner.

Hi Ashok,Out of the two, Uttam Galva looks a better pick to me than Seamec. You can buy Uttam Galva on dips for long term.

Hi Aman,Your purchase price of SA Petro is not too high. I am hopeful that you will make profits in it if you can hold it for six to twelve months.

Hi Ashok,I think market is currently stuck in a range between 4500 and 5050. It has to break either of these levels to go anywhere decisively. Both Jayaswal Neco and JKLAKSHMI can be bought at current levels. I prefer JKLAKSHMI. I would not buy IFCI at any level.

About Me

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Thanks for visiting my blogspot. I live in India but consider myself a World Citizen. I have varied interests ranging from the Stock Markets, Astrology to Acting/Writing in Movies. Hope we can share our views and interact with each other through this website.
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Disclaimer

All information posted on this web site has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Under no circumstances is this an offer to sell or a solicitation to buy securities discussed on this site. Past performance is no guarantee of future success. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. I have positions in some of the companies discussed. All data, information and opinions are subject to change without notice. (c) 2007 All Copyrights belong to Superstar